Correlation Between Applied Finance and Bbh Intermediate

Can any of the company-specific risk be diversified away by investing in both Applied Finance and Bbh Intermediate at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Applied Finance and Bbh Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Finance Explorer and Bbh Intermediate Municipal, you can compare the effects of market volatilities on Applied Finance and Bbh Intermediate and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Applied Finance with a short position of Bbh Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Bbh Intermediate.

Diversification Opportunities for Applied Finance and Bbh Intermediate

-0.38

Correlation Coefficient

Applied Finance  Bbh Intermediate

Very good diversification

The 3 months correlation between Applied and Bbh is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Bbh Intermediate Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bbh Intermediate Mun and Applied Finance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Applied Finance Explorer are associated (or correlated) with Bbh Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bbh Intermediate Mun has no effect on the direction of Applied Finance i.e., Applied Finance and Bbh Intermediate go up and down completely randomly.

Pair Corralation between Applied Finance and Bbh Intermediate

Assuming the 90 days horizon Applied Finance Explorer is expected to under-perform the Bbh Intermediate. In addition to that, Applied Finance is 5.79 times more volatile than Bbh Intermediate Municipal. It trades about -0.05 of its total potential returns per unit of risk. Bbh Intermediate Municipal is currently generating about 0.01 per unit of volatility. If you would invest  1,015  in Bbh Intermediate Municipal on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Bbh Intermediate Municipal or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Applied Finance Explorer  vs.  Bbh Intermediate Municipal

Applied Finance Explorer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Finance Explorer has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Applied Finance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bbh Intermediate Mun

Risk-Adjusted Performance

Weak

Over the last 90 days Bbh Intermediate Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Bbh Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Applied Finance and Bbh Intermediate

The main advantage of trading using opposite Applied Finance and Bbh Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Bbh Intermediate can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bbh Intermediate will offset losses from the drop in Bbh Intermediate's long position.

The idea behind Applied Finance Explorer and Bbh Intermediate Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.